DA calls for urgent financial intervention for struggling municipalities in Mpumalanga

Issued by Trudie Grovè-Morgan – MPL DA Spokesperson on the Department of Cooperative Governance and Traditional Affairs
12 Jan 2023 in Press Releases

The DA in Mpumalanga is concerned with the progress of the financial recovery approach strategy implemented to address financial challenges across various municipalities. 

The program spearheaded by the Department of Cooperative Governance and Traditional Affairs (COGTA) was adopted in 2018 with the aim of helping affected municipalities reduce their debts, collect revenue, save money and service creditors on time.

Govan Mbeki, Msukaligwa, Lekwa and Emalahleni Local Municipalities are amongst the municipalities where this approach was implemented. 

The DA finds it extremely concerning to note that there has been no significant improvement in these financially distressed municipalities.Despite numerous documents and financial reports raising alarm bells, the provincial government is still very reluctant to take a hands-on approach.

For a number of years, our financially distressed municipalities in the province have struggled with all aspects of revenue generation, inaccurate billing and an inability to collect monies owed to them for services provided.

Alongside this inherent inability to generate revenue, our debt to creditors such as Eskom, Rand Water and the Department of Water and Sanitation have increased drastically.

The DA condemns the fact that the Eskom accounts for both Emalahleni and Govan Mbeki was allowed to escalate to just over R10 billion, with very little intervention from the province.

According to the Section 71 report for the month of October 2022, Govan Mbeki’s inability to generate revenue from the sale of services resulted in the municipality not only being owed R3.3 billion for services provided, but it also owed Eskom and Rand Water R3.3 billion and R568 million respectively.

Equally concerning is the fact that the Eskom debt in Emalahleni grew to R7.1 billion, whilst the municipality was owed R6.8 billion for services provided. The Eskom debt is crippling these two municipalities and severely hindering their ability to deliver services.

For the 2019/2020 financial year, the Standing Committee On Public Accounts (SCOPA) report on the 2019/20 Assessment Report of the Section 131 (b) of the Municipal Finance Management Act 56 of 2003 noted that both Emalahleni and Govan Mbeki operated at a deficit of R550 million and R650 million respectively. 

These devastating developments across our municipalities are an indication of the ANC’s capabilities in governance. In this regard, the financial recovery approach is one of their many unsuccessful strategies aimed at misleading the public. 

The DA holds the ANC administration accountable for the collapse of these municipalities.  I have therefore written a letter to COGTA MEC Mr. Mandla Msibi to urgently determine whether this plan has produced the desired results.